FAQ:
Tokenomics, Emissions & Investors
What is the difference between GMX & esGMX?
esGMX tokens are escrowed GMX; locked GMX tokens that are subject to vesting rules. Your esGMX can either be staked, to earn rewards just like normal GMX tokens do, or vested in your GMX or GLP Vault. They can not be sold. While vesting, esGMX tokens earn no rewards and linearly unlock to become GMX over the course of 365 days.
How do I vest my esGMX?
When you initiate vesting via your GMX or GLP Vault, the proportional amount of GMX or GLP tokens you used to earn your esGMX rewards is reserved.
Staked GMX, esGMX, GLP and Multiplier Points can all be reserved this way, in your Vaults, to vest your esGMX. While reserved for vesting, these tokens will continue to earn rewards, but the vesting esGMX themselves do not.
You can click on ‘deposit’ at the bottom of the app.gmx.io/#/earn page, at the GMX/GLP vesting vaults, to see the number of tokens needed.
Will I lose my Multiplier Points if I unstake my GMX?
Yes, when you unstake, Multiplier Points get burned proportionately to the amount unstaked (eg if you unstake half your GMX, half your Multiplier Points are burnt).
What is the GMX max supply?
The max supply of GMX is 13,250,000. Minting beyond the max supply of 13.25 Million is subject to strict conditions and a DAO vote, plus controlled by a 28-day timelock.
Which VC’s are invested in the GMX protocol?
Unlike many projects of a similar scale and traction, GMX has had no private fundraising rounds with institutions such as venture capital firms or crypto hedge funds.
What does the unlock calendar look like?
There are no “unlocks” of the base GMX token
However, there were emissions of esGMX, escrowed GMX tokens, to GMX stakers until March 2023. These esGMX emissions are subject to vesting rules. For details, see this Governance discussion.
You can also see the current total supply of esGMX on https://app.gmx.io/#/earn on both Arbitrum and Avalanche (note that they are separate)
What does the liquidity mining schedule look like?
The esGMX emissions schedule for 2022 was as follows:
Incentives in the form of esGMX have tapered off: esGMX emissions to GLP holders ended in December 2022, and esGMX emissions to GMX stakers ended in March 2023.
What is the planned, long-term emissions schedule?
esGMX emissions are tapering off. The main use of esGMX emissions is to incentivize the decentralization and usage of the protocol. As GMX adoption increases, esGMX emissions to stakers and liquidity providers are decreased. This process of reducing token inflation is currently underway. The goal is for the protocol to reach a state where esGMX incentives are no longer necessary.
Does GMX have sufficient runway? What about long-term financial sustainability?
GMX has sufficient runway to compensate its paid contributors for, at least, another 1,5 years as of the time of writing (January 2023). At mint, 1 million GMX tokens were reserved for marketing, partnerships, and community developers. Additionally, bond sales of discounted GMX are ongoing via Bond Protocol. 50% of the proceeds of those bond sales help fund the protocol’s further development.
GLP, Liquidity & Rewards
Do I need to stake GLP to receive rewards?
No, GLP is automatically staked when you mint it.
Who is the counterparty to the traders?
GLP, a multi-asset pool containing capital contributions from individual liquidity providers, serves as the counterparty to the traders on GMX.
How is the price of GLP calculated?
The price of GLP is calculated as: total assets under management in GLP pool / glp.totalSupply(). The value of GLP is affected by:
fluctuations in the prices of the underlying assets in the pool
earned protocol fees
and the Profit & Loss (PnL) of the traders on GMX.
How are new assets added to the GLP pool, so that they can be traded on GMX?
GMX is conservative about the composition of the GLP pools on Arbitrum and Avalanche. There are three considerations for adding new coins to GLP: 1) the degree of user demand to trade these coins, 2) the availability of reliable price feeds, and 3) the security of GLP liquidity providers.
Which asset should I use to mint GLP to save on fees?
The protocol uses dynamic fee pricing for Spot swaps and GLP deposits ( minting). Minting GLP with assets that are underweight incurs lower fees, and vice versa. This helps to balance the weights of assets in the GLP pool when they deviate from target weightings. Go to ‘GLP Index Composition’ at app.gmx.io/#/dashboard to see which tokens are over- vs. underweight.
Why is the esGMX rewards APR for GLP 0% this week?
When the ETH APR of the GLP pool is above 20%, there will be no additional esGMX rewards. If the ETH APR is below 20%, esGMX rewards will be used to top up the GLP rewards.
There is a maximum of 25.000 in monthly esGMX emissions for GLP as of July 2022. There is no guaranteed minimum APR. For details, see this Governance discussion.
How often does the rewards APR get updated?
Once a week, every Wednesday. So, the APR shown is based on last week’s protocol revenue.
Does Impermanent Loss occur when depositing in GLP?
There is no concept of impermanent loss for GLP, given it is not a constant-function Automated Market Maker (AMM). The pool does not rely on arbitrageurs adding and removing different tokens from the pool to equalize the token prices on GMX to the “market-wide” prices.
How does GMX determine the price of the various assets in GLP?
GMX relies on Chainlink oracle price feeds, coupled with an aggregate of prices from leading volume exchanges, to determine prices for its spot swaps and perpetual swaps. GMX does not natively derive a market-clearing price for trades, based on activity on its own exchange and the actions of arbitrageurs.
Product & Trading
Is it possible to set a stop loss?
You can add ‘triggers’ to any open position. If the trigger is above the mark price, it’s used as a take-profit order. If the trigger is below the mark price, it’s used as a stop-loss order. Both can be used simultaneously. Once the trigger is hit, a market order is used for execution. The actual exit price can deviate slightly from the trigger level itself, due to price movement.
Is the 1-minute chart available?
Currently, it is not, but it will be in the future.
Why did my limit order not execute even though the price reached that level?
Orders are not guaranteed, as it takes a few blocks before your on-chain order gets triggered and picked up by the Keepers. Prices moving too fast, as well as slippage maximums, can cause orders not to trigger. You can set your allowed slippage in the Settings menu of the App.
Why does it not let me long/short a certain asset?
The protocol has a maximum cumulative position size for longs/shorts on each specific asset. These maximums are determined by the available liquidity and additional risk parameters. If the maximum amount of longs/shorts on your asset has already been reached, users can't open new positions on that specific asset, until existing positions are closed.
What is the fee I pay to borrow trading assets, and how is the borrowing fee calculated?
The borrow fee per hour will vary based on the asset’s utilization. The calculation of the borrow fee is: (assets borrowed) / (total assets in pool) * 0.01
What is the purpose of GMX’s Floor Price Fund?
The original idea behind the Floor Price Fund was to establish a floor price for the GMX token. However, currently, the Floor Price Fund is used as a treasury for GMX. Any usage of these funds needs to be approved by the DAO governance.
Which alternative RPC´s are available?
you can use the backup URL https://rpc.ankr.com/arbitrum from Ankr, or create one yourself via Alchemy or QuickNode. Switch the RPC URL in the network settings of your wallet. You can find additional RPC’s for both Arbitrum One and Avalanche C-Chain on Chainlist, a community-curated RPC directory for various chains.
Expansion Plans & Roadmap
Why did GMX choose Arbitrum as its first blockchain?
Arbitrum is an Ethereum Layer-2 solution that provides users with a fast, cheap and accessible trading experience, while maintaining the majority of the Ethereum Layer-1 security protections. This suits a decentralized perpetual exchange like GMX well.
Does GMX intend to deploy the protocol on other chains?
Eventually, yes. However, for now, the focus is on further improving the product and trading experience on the two existing chain deployments.
The criteria for assessing the next chain to deploy on include, but are not limited to, the following factors:
Security, including safety and liveness
Scalability and average transaction cost
Degree of organic user activity
Quality of other DeFi protocols present, and potential synergies via composability
Implementation difficulty and incremental maintenance costs introduced by the new chain
Chain incentives
What does the product roadmap look like?
An ongoing focus is on improving the platform’s reliability and user interface.
Our first development priority is supporting synthetic tokens, which would improve the platform by providing more options to traders. The smart contracts for ‘GMX V2’ have been released in October 2022.. The launch of GMX v2 is expected around April 2023.
The second priority following that is X4: Protocol-Controlled Exchange.
A close third priority is evaluating new chains to deploy GMX on.
For additional details, please see this 2022 Task Prioritization post on the Governance forum.
Contributors & Governance
Why are the core contributors anonymous?
Privacy and personal safety.
Ability to control their public image and have a clear separation between past and current endeavors (both within crypto and beyond).
Regulatory and jurisdictional uncertainty.
How are the core contributors incentivized?
Paid contributors receive monthly compensation, in a mix of stablecoins and GMX tokens.
How does the governance process work and how can community members contribute?
Community members are encouraged to participate in in-depth governance discussions at the GMX DAO Governance Forum: https://gov.gmx.io/
Ideas and proposals with a certain degree of community enthusiasm are subsequently put up for Snapshot vote, to gauge community support.
Proposals that receive majority support, are scheduled to be executed at an appropriate time.
While discussions and voting involving contributors happen within the GMX DAO social media platforms, it doesn't hold any binding authority over them.
Security & Risk
Are there risks to investing in the protocol?
The risks depend on in what capacity you’re participating in GMX.
For GLP holders, the key risks to be aware of are:
Counterparty risk. Collectively, the GLP liquidity pool acts as the counterparty to traders on the platform. That means that as a GLP holder, you are exposed to the PnL of traders, based on your proportional contribution to the GLP pool. If traders make money, GLP loses money, and vice versa.
Token price risk. Refer to the ‘GLP’ section of the FAQ above for how exactly the GLP price is calculated. However, GLP is essentially a basket of underlying crypto assets. As such, it is exposed to price volatility of the underlying.
For GMX holders, the key risks to be aware of are:
Token price risk. GMX is a relatively early-stage protocol and, as such, is prone to price volatility.
Liquidity risk. GMX is significantly less liquid than large-cap tokens such as BTC and ETH.
Both GMX and GLP holders have these risks in common:
Smart contract risk.
Arbitrum One and Avalanche C-Chain safety and liveness risk.
Admin key and contract upgradeability risk.
Protocol solvency risk (i.e. if traders have a long, large winning streak, it would negatively impact GLP and by extension tokenholders).
Is there any bug bounty for Whitehat hackers?
There is an active bug bounty for GMX on Immunefi, with one of the highest maximum bounties in the entire crypto industry: $5 Million.
DISCLAIMER:
The information, content, and materials provided here are for general informational purposes only and do not constitute financial or investment advice, nor a legally binding agreement.
Note that discussions and voting involving contributors may occur on GMX DAO social media platforms, but contributors are independent actors, and nothing discussed or proposed should be understood as an obligation for an individual contributor to act.
Please conduct your own research and consult with appropriate professionals before making any decisions based on the information provided on this website.